Fidelity Bank Plc at the weekend completed a N14 billion private placement with the listing of about 3.04 billion ordinary shares issued to two major investors under the private share placement.
Regulatory report at the weekend indicated that a total of 3.037 billion ordinary shares of 50 kobo each were added to the outstanding shares in the name of Fidelity Bank at a price of N4.60 per share.
The supplementary listing increased the total issued and fully paid up shares of Fidelity Bank from 28.97 billion shares to 32.01 billion ordinary shares of 50 kobo each.
The additional shares were sold to two strategic investors, under a capital raising plan aimed at beefing up the capital base of the mid-tier bank.
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Under the private placement, two applications were received and were fully allotted. A strategic investor purchased 2.75 billion shares at N4.60 per share in a deal valued at N12.65 billion. This represents about 8.594 per cent in the post-offer share capital.
Another investor acquired 287.41 million ordinary shares of 50 kobo each at N4.60 in a deal valued at N1.322 billion, representing about 0.897 per cent of the enlarged post-issuance share capital.
Nigeria’s apex capital market regulator, Securities & Exchange Commission (SEC) had cleared the full allotment of the private placement.
Fidelity Bank had adopted the private placement option as a way to comply with provisions of Section 124 of the Companies and Allied Matters Act, 2020 and the Companies Regulations 2021, and pursuant to Paragraphs 9 and 10 of the Articles of Association of the company. Recent changes in corporate laws disallow keeping subsisting unissued shares, leaving companies with the option of cancelling current unissued authorised share capital or issuing out such shares.
Shareholders had at an extraordinary general meeting last October in Lagos approved the private placement, waiving their pre-emptive rights to the unissued shares to be allocated to select private investors and approved that such issued shares to private investors shall rank in all respect equally with the existing ordinary shares of the bank.
Fidelity Bank is building up its capital base as the bank increases its market share.
On the back of the success of the N14 billion private share placement, the bank recently launched a hybrid capital raising plan aimed at sourcing some N90 billion in new equity funds from existing and new shareholders.
The bank plans to issue 13.2 billion ordinary shares of 50 kobo each to new and existing investors to boost the bank’s capital base.
The bank plans to increase its share capital from N16 billion or 32 billion shares to N22.6 billion or 45.2 billion shares through creation of additional 13.2 billion ordinary shares of 50 kobo each
Under the plan, the bank is seeking to float a public offer of 10 billion shares and a rights issue of 3.2 billion shares. The rights issue will be allotted on the basis of one new share for every 10 shares held.
At the current market valuation, market analysts estimated that the bank may be able to raise some N90 billion, although the final offer prices may be determined by the market situation and the extent of discount the bank prefers for its rights issue.
The Nigerian Exchange (NGX) upgraded Fidelity Bank from a low-priced stock to medium-priced stock following recent appreciation in the share price of the commercial bank.
According to the NGX, Fidelity Bank traded above the N5 mark on February 20, 2023 and has remained above the N5 mark up until close of business on June 30, 2023, thus necessitating the upgrade to medium-priced stock in line with the three-tier, price-based categorization at the Exchange.
Fidelity Bank has said it needed new capital to sustain its current strong growth trajectory in order to increase profitability, domestic and international expansion and enhancement of its digital capabilities.
“Advances in technology, the rapid evolution of the business of banking and changes in the operating landscape make it imperative that the bank remains agile, adaptable and properly positioned to respond appropriately to developments, while remaining a competitive and forward looking institution,” the bank stated.
According to the bank, the new hybrid capital raising is aimed at ensuring that the bank can take advantage of emerging business opportunities and secure long term profitability and competitive advantage, while ensuring increased shareholder value.
Managing Director, Fidelity Bank Plc, Mrs. Nneka Onyeali-Ikpe said the bank was growing in leaps and bounds and needed to expand its capital base to take advantage of emerging opportunities.
“We will also use the additional capital to enhance our technology infrastructure to enable us to serve more customers,” Onyeali-Ikpe said.
